Group Managing Director and CEO at NCBA Group John Gachora has called for a change in the global financing architecture.
Speaking during a business cocktail held at Serena Hotel in Nairobi, Gachora said that African countries pay eight times more than developed countries in the current financing architecture.
"One of the key problems is the cost of financing that Africa has to bear, eight times what the developed world is paying for the same debt.
"The best credit rating of any enterprise in the country is the country itself, so when the country is paying eight times the cost of debt, it means that the organization within that country is paying above that," Gachora stated.
The NCBA Bank CEO pointed out that if the rating is reviewed and African countries' borrowing costs come down, businesses on the continent could get financing at a much lower cost.
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"If a country's rating can be reviewed and the borrowing cost can come down for our countries, it means that business will also be able to get financing at a much lower cost" Gachora.
He mentioned that Bretton Woods has denied the financial architecture in Africa for over eight decades, saying Africans should push back and question the economic model.
"Since 1945, the Bretton Woods have defined the financial architecture in which we operate, as Africa we have looked at Bretton Woods institutes as the god of finance. This is the first time we are questioning the architecture of this setup," said Gachora.
At the same time, the NCBA CEO said the main barriers to attracting capital in Africa are the negative credit rating, the lack of data availability, and the gender balance problem.
Gachora noted that the lack of data collection in the African continent has made it hard for many companies and investors to understand the market.
On the gender balance issue, the NCBA boss noted that men tend to secure loans from financial institutions more than women despite women's better character.
"When you look at the most important thing for lending which is character women win hands down. However, in Africa, we are still caught in collateral where most pieces of collateral are in the names of men. Families buy land but the man or the son appears in the title deed so the banks feel more comfortable to lend to men over women," said Gachora.
Explaining the impact of the current global financial architecture on countries such as Kenya, the NCBA CEO noted that these countries end up spending up to 50% of their revenue on servicing debts at the expense of devolution funds and development projects.
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On the other hand, NCBA has 92 branches in 26 counties in Kenya and is also available in the Tanzania, Rwanda, and Uganda markets. The bank has a customer base of over 60 million.
In 2023, NCBA posted a profit after tax of Sh21.5 billion, a 56% increase year over year. Tanzania, Rwanda, and Uganda subsidiaries collectively delivered a profit before tax of Sh 3.0 billion, an improvement from the loss of Sh 308 million posted in 2022.
The bank had a substantial deposit base of Sh 253 billion the same year and grew cross-border corporate relationships across the region by 29 percent.
Further, NCBA disbursed Sh 930 billion of loans in 2023, an increase of 28 percent year-on-year.
